The most common definition of actual cash value is purchase price less depreciation (t/f)

false

If your insurance company makes a payment to you, subrogation is the right of the company to collect from the person causing the accident or from his/her insurance company (t/f)

true

nancy's house has been completely destroyed by fire. Prior to the accident, the house had a value of $100,00. Nancy had two separate policies totally $60,000 each. She may collect $60,000 from each insurance company. (t/f)

false

a company with low financial risk has a little to no long-term debt. (t/f)

true

the monthly payment on 8%, 36 month, add-on loan for $10,000 would be

344

Home equity loans are similar to other installment loans except:

the interest paid is genrally tax deductible

Sometimes it may be better to use savings rather than borrow to make a purchase. This would be recommended when

the cost of borrowing is greater than the interest earned on the savings.

interest rate risk is greater for stocks than for bonds. (t/f)

false

Interest rate risk is greater for long-term bonds than for short-term bonds. (t/f)

true

Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.

true

The returns you expect from securities are income and growth

true

In most investments, there is a risk-return tradeoff (t/f)

true

In most investments, there is a risk-return tradeoff (t/f)

true

All categories of common stock are voting (t/f)

false

You received a cash dividend from your stock investment this year. This is taxable income. (t/f)

The approximate yield to maturity when the average income is $3.00, the average capital gain is $6.00, the average investment is $27. 00, and the investment is held for 3 years is

33 percent

suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratios is 10. What is the current price of Wal-Mart stocks?

Most people are too conservative when investing their retirement funds. (t/f)

true

It really makes little difference whether you start retirement savings at age 25 or at age 45 (t/f)

false

Minors can handle large sums of money and property (t/f)

false

knowing where parents keep important documents is essential to the estate planning process. (t/f)

true

dying interstate means dying with a valid will. (t/f)

false

a will is required by state law. (t/f)

false

a will may be invalid if the testator was under undue influence of another person (t/f)

true

a codicil is a simple and convenient legal means of modifying a will. (t/f)

true

proof of mental capacity lies on the person contesting a will, not the individual writing will. (t/f)

true

death wil erase any debts existing at the time. (t/f)

false

a company with low financial risk has little to no long-term debt. (t/f)

true

sunshine mining bonds have a $10,000 face value, pay $95 annual interest, mature in 2004, and are currently quoted at $1302.50. The coupon rate of interest is:

9.500%

A bond is quoted as Lging 8.5 07 with a close of 106. Which of the following statements are true about this bond?

all above

based upon this information

bonds: pop 8-3/4

yield: ?

cur valume: 70

close: 110-1/2

net change: 1/2

what year will the bond reach maturity?

2010

base upon the following information:

bonds: pop8-3/4 10

yield: ?

cur valume: 70

close: 110-1/2

net change: 1/2

what is the current yield on this bond?

8.82%

Your convertible bond has a conversation ratio of 15 shares. Current market price of the common stock is $50/share. The conversation value of this bond is

$750

tax on capital gains is paid:

in teh year the stock is sold

annual dividends per share divided by market price per share equals:

dividend yield

Monte Jackson is considering the purchase of XYZ stock and would like to estimate its approximate yield if he holds it 5 years. The current price is $20 and Monte expects it would rise to $30 over the 5-year holding period. The expected dividend is $1.00 each year

12%

Calculate the earnings per share of a company with the following information?

sales: 200,000

net profits: 50,000

preferred dividends: 1,000

common dividends: 6,000

common shares outstanding: 12,000 shares

$4.08/share

The purchase of insurance is a common form of which risk management technique:

risk transfer

Underwriting is best described as:

activities related to selecting acceptable risks so that general insurer objectives are met.

Mike purchased a whole life policy with a face value of $1,000,000 and dies several years later. At the time of his death, Mike has: paid a total of $12,000 in premiums; accumulated $25,000 in cash value; received a total of $5,000 in policy dividends; and has a $10,000 policy loan outstanding. If Mike's beneficiaries elect to receive a lump-sum distribution of death benefits, how much will it be?

$ 990,000

The most valuable single technique in personal risk management to assist an individual in determining how much life insurance is needed is:

Assessing the family's total economic needs and subtracting financial resources available to meet those needs.

Purchasing auto insurance with a $500 deductible is an example of

risk transfer to an insurance company and risk assumption of $500

The probability of a loss occurring can be reduced by

loss prevention

If life insurance is convertible, the policy can be

changed to another type of life insurance.

For the insured who needs more life insurance, the best option for receiving policy dividends is to

buy additional paid-up coverage

Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, was the primary beneficiary and their children, Mimi (age 24) and Ann (age 30), were the contingent beneficiaries. All three survived Marilyn. How would the policy proceeds be distributed?

$200,000 to Jack

When a primary beneficiary dies before the insured, proceeds are payable to

the contingent beneficiary or beneficiaries.

Which of the following best approximates the length of the average nursing home stay?

2.5 years

Most people do not need protection against

a specific dread disease.

An elimination period in disability income insurance is most closely analogous to which of the following cost sharing provisions in health insurance?

deductible

Which of the following best describes a "pre-existing condition"?

A medical condition for which one has previously been treated.

Given a $500 annual deductible, a $4,000 lid on the coinsurance, 80/20 coinsurance, and a $250,000 policy limit, how much of a $15,000 medical bill will be paid by the insured?

$3,400

Nick has a comprehensive health care policy with a $250 per calendar year deductible and 80%-20% with a maximum $1,000 copayment cap per calendar year. In January, Nick had a $600 claim which the insurance company paid $280. Nick experiences another unrelated claim in October resulting in total bills of $5,000. How much will Nick have to pay for the second claim?

Mutual funds may be classified by the types of securities they purchase. (t/f)

true

It really makes little difference whether you start retirement savings at age 25 or at age 45. (t/f)

false

When one estimates retirement needs, you start with a projection of expenses stated in current dollars (t/f)

true

A $3,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years.

$110,340

In order to avoid penalties, one must typically start taking minimum distributions from most retirement accounts by age

70 1/2.

Jacque Solis (age 38) is leaving her current job and would like to take a long vacation before starting new employment. She has $58,000 in a qualified plan that she would like to live on during this period. If she is in a 25 percent marginal tax bracket, how much will she have left after paying taxes and penalties?

$37,700

Jacque Solis (age 38) is leaving her current job and would like to take a long vacation before starting new employment. She has $58,000 in a qualified plan that she would like to live on during this period. If she is in a 25 percent marginal tax bracket, how much will she have left after paying taxes and penalties?

$37,700

Will works for Micro Lance Computer Company and participates in its thrift and savings plan. For every $1.00 Will contributes to the plan, up to 5 percent of his salary, the company contributes $0.25. If Will's salary is $40,000 and he decides to maximize the matching contributions, how much will be contributed to Will's plan in a year by both the employer and Will?

$2,500

Henry has a defined benefit plan that promises an annual retirement benefit based on the average of his last five years of salary times 2.5 times years of service. At retirement Henry has 21 years of service and an average salary over the last 5 years of $95,000. What will his annual benefit be?

$49,875

Normal retirement age is typically defined as ____ years of age.

65

If one is unsure about the facts needed to estimate retirement needs, it is better to do nothing for a few years. (t/f)